Stablecoin Accounting: What FASB's Cash Equivalent Proposal Means

Stablecoin accounting is about to hinge on a question many finance teams haven't asked yet: what enforceable rights does your entity actually hold? In August 2026 FASB issued a proposal on when certain stablecoins may qualify as cash equivalents under Topic 230, and it points to redemption rights, reserve quality and transparency, not the token's name. A recent Forvis Mazars review of where digital asset accounting stands frames the same message across the whole field: the accounting follows what the token represents, not its label or the blockchain it sits on.

This piece walks through what the proposal says, how it sits beside ASU 2023-08, the open FASB work on wrapped and receipt tokens and lending, and what controllers, auditors and CFOs should be doing in the meantime. It is a proposal, not final guidance, so the point is preparation rather than a change to your current policy.

Where Digital Asset Accounting Stands After ASU 2023-08

Before Accounting Standards Update 2023-08, many crypto assets were accounted for under ASC 350-30 using a cost-less-impairment model. That model was widely criticised because it recorded declines but not recoveries, which left balance sheets out of step with the economics. ASU 2023-08 introduced a measurement model that more closely reflects the economics of qualifying crypto assets, and the Forvis Mazars commentary describes it as a significant step forward for financial reporting. If you search for the relevant US GAAP guidance for crypto, you will also see it referenced as ASC 350-60.

What the ASU settled

The ASU resolved an important measurement issue for many crypto assets. For teams holding qualifying assets, that gave a clearer basis for the numbers on the statement of financial position and in the income statement.

What it left open

A world of tokens remains outside the scope of ASU 2023-08. Tokens can convey ownership interests, governance rights, utility features, or claims on other assets. Fixing the measurement question for qualifying assets did not fix the classification question. For a reporting entity that means the first job on any new token is not valuation, it is working out what the token is. That sounds basic, yet it is where inconsistent policies tend to creep in, especially when a business holds dozens of assets across several wallets and venues.

The practical principle from the source is worth writing into your accounting policy memo: the accounting should follow what the token represents rather than its label or the blockchain on which it resides. A token described as a "wrapped" or "receipt" asset may still be a claim on something else, and that claim is what you account for.

FASB's Stablecoin Proposal: Cash Equivalents Under Topic 230

Stablecoins have become an increasingly important part of the digital asset ecosystem, and FASB's August 2026 proposal addresses when certain stablecoins may qualify as cash equivalents under Topic 230. For anyone doing USDC accounting or wider stablecoin accounting, this is the most commercially significant item in the current agenda, because cash equivalent classification affects the cash flow statement, liquidity metrics and how lenders and investors read your treasury.

The characteristics the proposal focuses on

The proposal centres on several key characteristics:

• Direct redemption rights
• Reserve composition
• Reserve transparency
• Market liquidity
• The ability to convert the asset into a known amount of cash

No single item is presented as a shortcut. The analysis looks at the combination, and that is deliberate.

Why liquidity alone may not be enough

Under the exposure draft, market liquidity alone may not be sufficient. Being able to sell an instrument in a liquid market is not necessarily the same as holding an enforceable right to redeem it with the issuer. This is a subtle but important distinction. A stablecoin that trades tightly around par on an exchange may feel like cash, yet if your entity cannot redeem directly with the issuer, the proposal suggests that comfort may not carry the classification.

Two holders, two answers

When applying the exposure draft examples, two holders of the same stablecoin may have different enforceable rights. One holder might have a direct redemption relationship with the issuer, while another holds the token only through an intermediary or an exchange account. As a result, the analysis follows the rights held by the reporting entity rather than the label attached to the asset. For a group with several entities, that could mean different conclusions in different legal entities holding the very same token.

For a deeper look at how an issuer's reported results feed into this analysis, see what Circle's Q3 results tell finance teams about USDC accounting.

Wrapped Tokens, Receipt Tokens and Crypto Lending

Alongside stablecoins, FASB has continued to evaluate projects involving wrapped and receipt tokens and crypto asset lending arrangements. These matter directly to anyone doing DeFi accounting, where receipt tokens for deposits and wrapped versions of assets are routine.

Bringing wrapped and receipt tokens into scope

FASB is evaluating whether certain wrapped and receipt tokens should be brought within the scope of ASU 2023-08. If that happens, some positions that currently sit outside the fair value model could move into it. Until then, finance teams should keep a clear inventory of which of their tokens are in scope and which are not, and be ready to explain the boundary to auditors.

Encumbered assets and counterparty credit risk

On crypto asset lending, the source describes two proposed ideas:

1. Encumbered crypto assets should be presented separately from other unencumbered crypto assets within the statement of financial position.
2. Fair value measurement of encumbered crypto assets should consider the credit risk of the counterparty where credit risk exists.

The project also includes proposed disclosure enhancements that would give more transparency about lending activities, encumbrances and related risks. If you lend assets out or pledge them as collateral, plan now for a separate line item and for tracking which units are encumbered at each reporting date.

Movement is not derecognition

One principle deserves emphasis: the movement of a crypto asset does not automatically determine whether derecognition should occur. The analysis must consider what rights have been transferred, what rights have been retained, and who controls the asset. A transfer to a lending protocol or a counterparty may leave you with retained rights and ongoing exposure. Sending a token out of your wallet is a fact about the blockchain, not a conclusion about your books. Our earlier piece on what protocol mechanics mean for your books in DeFi accounting covers how that plays out in practice.

Revenue Recognition and Smart Contracts

Two other themes in the source are less about new proposals and more about getting existing standards right in a digital asset setting.

Gross versus net under ASC 606

Digital assets are nonfinancial intangible assets, so the transfer of a digital asset under a contract with a customer is accounted for under ASC 606. The entity must decide whether it controls the specified good or service before it is transferred. If control exists, the entity generally acts as a principal and records revenue gross. If it facilitates a transaction between other parties, it may be an agent and records revenue net.

The conclusion can affect SEC filer status, key performance indicators, and how investors interpret scale and performance. A gross presentation can make revenue look significantly larger than a net presentation even when the underlying economics are similar. For exchanges, platforms, market makers and token issuers, the principal-versus-agent memo is therefore a high-scrutiny document, and the reasoning should be written down and refreshed when the business model changes.

Smart contracts and the control environment

Smart contracts support mint-and-burn processes, token conversions, security management and other automated financial transactions. Organizations need to consider where decision making is embedded in code, how transactions executed through smart contracts should be accounted for, and which governance, logical security, change management and operational controls support reliable reporting.

Accountants and auditors need to understand how a contract operates, who can modify it, what data it relies on, and what rights and obligations the arrangement creates. The source lists the control areas: governance, administrative authority, wallet and signing practices, source code management, deployment, monitoring, incident response, and the integrity of oracle and external data sources. Because no two smart contracts are necessarily alike, differences in governance, administrative rights, data dependencies and economic terms can lead to different accounting conclusions. The code explains how a transaction is executed, but you still have to understand what the arrangement is designed to accomplish.

What Finance Teams and Firms Should Do Now

None of the open FASB items is final, so nothing here requires restating anything today. What it does require is better documentation and better data, so that when guidance lands you can apply it quickly.

For CFOs and controllers

• Build a token inventory that records, for each asset, what it represents: ownership interest, governance right, utility feature or claim on another asset.
• For each stablecoin balance, record who the issuer is, whether your entity has a direct redemption right, and through which legal entity and account the token is held.
• Separate balances that are pledged, lent or otherwise restricted from freely available ones, so an encumbered presentation is easy to produce.
• Review treasury policy wording. If your policy describes stablecoins as "cash" because they trade near par, test that against the rights you actually hold.
• Refresh your gross-versus-net conclusions for each revenue stream that involves transferring digital assets to customers.

For accounting firms and auditors

• Expect client conversations to shift from "how do we value it" to "what is it and what rights do we hold."
• Ask for evidence of redemption terms, reserve disclosures and counterparty arrangements, not just wallet addresses and exchange statements.
• Build smart contract understanding into planning: who can change the code, what oracle data it uses, and what monitoring exists.
• Check how your clients' systems capture the data needed for separate encumbrance presentation and expanded lending disclosures.

Tooling and data

The rights-based approach is a data problem as much as a judgment problem. Whatever digital asset accounting software or crypto bookkeeping process you use, it needs to carry attributes beyond quantity and price: issuer, redemption terms, holding entity, custody arrangement, encumbrance status and the contract or protocol involved. If those fields live only in spreadsheets or email threads, consider moving them into your system of record before year-end close.

IFRS reporters

The source discussion is framed around US GAAP, so it should not be read as changing IFRS treatment. Groups reporting under both frameworks should still note that the underlying questions, such as classification by rights and control for derecognition, are ones their IFRS crypto assets analysis will also have to answer, and should keep the two analyses aligned while the FASB projects develop. For a broader view of where the board's agenda stands, read the FASB crypto assets project Q3 2026 update.

What Progress Actually Looks Like

The Forvis Mazars view is realistic rather than triumphant. Progress does not mean every digital asset accounting question has been answered. It means the profession is developing a better framework for asking the right questions. Innovation continues to outpace expectations, and the list of standards under consideration remains long, yet compared with a few years ago the profession is clearly further along.

For finance teams the takeaway is practical. Treat the stablecoin proposal as a signal about method: identify the rights, identify who controls the asset, and let that drive the classification, presentation and disclosure. Teams that already work that way will find the coming guidance an adjustment. Teams that rely on labels, such as "it's USDC, so it's cash," will face more rework. For the pillar view of how these accounting questions connect to reporting obligations, see our crypto compliance reporting hub.

FAQ

Does the FASB stablecoin proposal change how I account for USDC today?

No. It is a proposal issued in August 2026 on when certain stablecoins may qualify as cash equivalents under Topic 230. Existing policy stays in place until guidance is finalised, but you should start documenting redemption rights and reserve information now.

Is a liquid stablecoin automatically a cash equivalent?

Not under the exposure draft. Market liquidity alone may not be sufficient, because selling through a liquid market is not the same as holding an enforceable right to redeem with the issuer.

Why could two holders of the same stablecoin reach different conclusions?

The analysis follows the rights held by the reporting entity. One holder may have a direct redemption right and another may not, so the same token can be treated differently.

What would the lending proposals change on the balance sheet?

The ideas described are separate presentation of encumbered crypto assets, fair value measurement that considers counterparty credit risk where it exists, and enhanced disclosures about lending, encumbrances and related risks.

Does moving a token to a protocol mean I derecognise it?

No. Movement does not automatically determine derecognition. You must assess what rights were transferred, what rights were retained and who controls the asset.